public lands that they weren't using. >> there was a lot of that last night. also the candidates' tax plans, a major topic of interest. >> and you can't buy the sales pitch, nobody who's looked at it that's serious actually believes it adds up. >> of course they add up. i was someone who ran businesses for 25 years. and balanced the budget. >> yeah, a lot of love in that room last night. john harwood will be joining us onset with more. plus, larry summers, obviously we have a lot to talk to him about, including the debate, the looming fiscal cliff, and management changes at citigroup. and joe mentioned earnings central. we do have a number of household names on the ayen genagenda. we're going to be welcoming a few top corporate executives this morning to talk about those quarterly results as well. the company outlooks and the broader economy. those include pepsi cfo hugh

johnston coming up at 7:10 eastern time. and michael ward, that's at 7:30 eastern time. but before we get to all of that let's get you up to speed on this morning's top headlines. andrew, i will send it over the you. welcome back. >> thank you, becky. stocks turned in their biggest gains in a month yesterday, driven in large part by earnings. three stocks rose for every one that fell on the new york stock exchange. take a look right now. dow looks like it would open about 16 points lower. s&p 500 would be up, but just marginally, and the nasdaq would be off about six and a half points. one economic stat of note today, september housing starts due to hit the tape at 8:30 a.m. eastern. yesterday the national association of home builders reported building sentiment rose to the highest level since before the housing bubble burst. and a bitter deal news. asml is buying u.s. based

simoner, asml's key supplier of a light base technology that's crucial to making a new generation of much smaller chips. so it's not quantum, joe, but it's light-based. one of these days we'll get a quantum chip. >> did you bring your rolodex yesterday? how do you do that? >> in the blackberry. i was in arizona, so we're three hours the wrong way. i was watching you. >> that was so great when you said those treasury staffers found out about it. >> they were watching cnbc. i would imagine you call tim geithner and the staff just to let them know, not because of tarp anymore. >> right. it seems like they're out of it, but how many years ahead can they use those tax laws -- >> that can continue. >> for like 20 years, right? and they didn't go bankrupt. so if you didn't go bankrupt, you can't use them. but by being saved, they get to keep them as taxpayers -- they

can earn profits the next ten, 15 years and we don't get anything. >> are we comfortable that we finally feel like we know what happened? >> no. i think we need to have more discussion. >> i ran into a citi employee that was now at morgan stanley and he ran down a list of why citi themselves were unhappy, like a history list that i had forgotten. they didn't sell to goldman sachs when they had the chance. >> the thing that was so weird was you knew all these problems were out there. the timing was bizarre. andrew was filling me on the back story. >> you know what else he told me? he said for employees that own citigroup stock when it was $5 and they did the reverse split, you know when it goes to 50 and then 35. at five, sometimes things go back to 15 and 20. this is not going from 35 to 200. so the minute you split that stock, all the employees knew

they were never getting -- they knew they would never get any of it back. it was interesting. but i was glad you were very confident on the phone. it was good. >> we can talk more about it in a little bit. >> we do need to talk more about it. >> are you going to come over here? >> i'm going to. >> we've got a seat for you. >> thank you. >> your mouse pad is on it. don't sit on that. >> i saw that. what's that about? >> i don't know. in earnings news, from after the bell, ibm reported slightly better than expected earnings, but revenues missed the mark. the company says customers have been putting off spending on big ticket items. stronger dollar also hit the top line, as it did with coca-cola yesterday. that's not going to help this morning. as far as the dow goes when that thing opens up. and intel is reporting better than expected earnings and revenue. this isn't beginning to help either. a weak outlook for fourth quarter revenue and margins for the next quarter disappointed

investors. the news dispelled some lingering hopes that a revival in pc demand would come towards the end of the year. and this high flier. intuitive surgical. those results hit after the bell. the company did lower its four-year forecast for procedure growth after posting a disappointing growth rate of just 22% for surgeries using its high priced da vinci robots. csx earnings -- we have michael ward on it. we'll talk to the ceo. revenue roughly in line. the company says it hauled 16% less coal. we talked about coal last night. demand from domestic utilities remained weak. meantime, shipments of automobiles and parts increased significantly as more cars were sold. and we will talk to michael ward in the next hour. looks like at about 7:30.

apollo offered a four-year revenue outlook that fell short of expectations. >> let's get a check on the markets this morning. you have the results coming up from ibm and intel. that is affecting the futures. right now you see those dow futures down by about 17 points. s&p futures are slightly higher. nasdaq down too because of intel and ibm and the related companies would be affected both in the dow and the nasdaq. in europe right now, take a look and you're going to see that there are some green arrows. the france, the cac is up by .4 of a percent. some modest gains there. in asia overnight we did see gains. in japan, nikkei was up by 1.2%. the hang seng was up by about 1%. energy was a huge part of the debate last night. oil prices are up by about 11 cents. you can take a look right now at the ten-year note and you'll see it's yielding a higher note than

we've seen in quite a while. the dollar this morning is down across the board. you can see right now the euro is trading at 131.14. gold prices in the mix at this point up by about $3.80. it is now time for the global market report, kelly evans is standing by in london this morning. good morning, kelly. >> good morning. the biggest gainer in the eurostocks, 600, up nearly 13%. what gives? it turns out moody's reiterates its investment grade rating. opened the way for investors to gain exposure to the spanish exwity market. bank shares are among those faring best. if we can whip around here for a second, you'll see the impact that this is happening. overall, stocks up about .2 of a

percent, so not the biggest move in the world. we can take a look at global markets. the ftse 100, the ibex in spain is up in the range of 1.5%. global markets should see positive more as well. also partly keying off plans for japan to perhaps pursue more fiscal stimulus before year end. a lot of cabinet members talking about that possibility this morning. take a look at the bond space, because we've seen some pretty remarkable moves, as far as francois hollande is concerned, europe crisis is over. that's what he's saying in an interview this morning. markets believe him to some degree today -- we're seeing spain rally 5.5%. italy, 4.83%, which is remarkable. we continue to sink below that 5% level. the german bund, this is an interesting one. partly because of the comments

from moody's, partly because of expectations tomorrow, that while no drastic solutions will be reached, there will be further steps supported by most members of the eurozone towards a solution. you're starting to see the bund take it on the chin as people price inflation or reflation. we're seeing upward pressure there. guilts were higher too as uk employment figures came out surprisingly strong. take a quick look at the currency markets. the guilt is strengthening. the euro is holding up better this morning, and that positive attitude reflected across crude, which is marginally higher this morning. so some pressure on gas prices perhaps in the weeks ahead. back over to you guys. >> how do you figure -- how does hollande figure that the euro crisis is over? >> isn't it obvious? you wake up one morn and everything seems magically

solved. just to quote a little bit from what he's saying, he's proposing a monthly meeting for the european heads of state. he's reiterating that france will hit the 3% deficit target. he's saying the eurozone is close to exiting the crisis. he doesn't necessarily lay out the reasons or mechanism for why. it sounds like hollande believes the institutional framework is coming together for both a political framework, ie the banking union, although it is slower than expected, both for a macro economic policy solution with the program, that we haven't necessarily seen spain need to using but is already acting to keep a lid on yields in spain. sees those solutions as steps coming together towards a resolution. but again, there is another general greek strike scheduled for tomorrow. the real question is whether the social fabric of the eu supports the integration that the political leaders envisioned. >> the omg program. that's a good name for it. >> omt. i'm using too many initials. >> i thought it was the omg

program. i think that hollande means the last crisis is over, but he's working on a new one, causing one himself. >> joe, you mean because he's pursuing more of a stimulus approach? >> no, 75% tax rate probably doesn't make a lot of people -- who's still living there? and corporations are probably going to leave, too. but the greek bonds -- >> if there's anywhere corporations are leaving, like we've seen the coca-cola bottling company, they're leaving greece. so while no one loves high tax rates, i think they'll take it over general economic malaise. >> yeah. she's young. we'll see. >> the fantasy of french politics. >> kelly evans, thank you for the numbers this morning. let's get back to last night's presidential debate. john harwood is burning the candle at both ends. joins us this morning. you were up late. >> can't even say my friend. that's now a pejorative, right?

>> we're past that debate. >> we were up late. we had a lot of action to keep us awake. >> that was some debate. >> you hear our music coming in? >> "i want candy." was that for candy crowley? >> wow. >> i've never seen a debate like that. >> i felt uncomfortable. >> when they got up close to each other physically. >> it was really interesting. we made a big deal about in 2000 about gore messing up by trying to get in bush's face. and bush had this very disarming kind of chuckle and greeting to him. those guys were getting in each other's face all night long and yelling. it wasn't just walking. >> i've never seen anything like this. but maybe i'm not remembering back far enough. have you ever seen -- >> no, i don't think we've ever had a presidential debate lick that. candy at various points was trying to get control over the proceedings. i think she was trying a little

bit harder than jim lair did in the first debate. but both of these guys i think perceives the stakes as so high that they were just not going to stop. they were blowing through time limits, blowing through debate rules, and blowing through when candy was trying to get them to stop. er was there any chance that the president didn't come out swinging? no. there's no way that rom ne and his people didn't know that was going to come ow swinging. >> everybody was swinging. it was all swings. >> i know. it was uncomfortable. and there was a yankee game on. and i was like do i want to feel this way or do i want to just relax and watch verlander? >> i couldn't turn away. >> i watched to the end. >> i did the first time. >> i honestly thought one of them might hit the other one. >> if you're a yankee fab, you

might want to turn away from that. >> some of the stuff -- we have been hearing a lot of that stuff. >> i think i'm getting debate fatigue. >> i feel like i know all the talking points. >> you know the talking points, but the reason i think the president was the story of the debate last night was -- i thought mitt romney was pretty good last night and he brought his a game as he did in denver, but what was different about this one was the president did, too. and he came in very strong. he had some different talking points. he didn't have a five-point plan. he's got a one-point plan. it's to help the rich. he tried to tie mitt romney to the republican congress. everything they say, me, too. that was a different riff. and then he got lucky in the order of the closing statements -- >> you'd miss this if you tushed it off. >> it was the final question. >> outsourcing? >> no, the final question had to do with -- i forget actually what the question was. and it didn't matter.

>> it's what characterizations do you -- >> exactly. what's the misperception about you and correct it. >> and so romney said well, a lot of negative things have said about me the campaign and i want everybody to know i care about 100% of americans. a pretty good answer. except that obama got to go last with no rebuttal. and obama came back and went hard, hard at the 47% video, which he hadn't done all night. and romney was unable to do anything. candy said okay, thank you, and good night. that was a rough moment. the only positive thing for romney is that i think viewership of these things declines over the course of the night. were were you surprised how negative obama was on romney and less focused on the vision? that was one of the criticisms the first time around was that he wasn't aggressive enough on romney but that there was a lack of vision. this time he was very aggressive on romney, but again, the vision issue totally missing. >> well, that is true.

some that have is inherent in being an incumbent in the sense that you're already governing. you think that what you're doing is the right thing. you're fighting to preserve what you have done. things like obama care under full attack from the other side. to some degree, your vision is i'm there, i want to stay there and i'm going to keep doing the kinds of things i've been doing, with some changes. immigration reform and that sort of thing. i think that he felt very strongly and his team felt very strongly that what happened in the first debate was that romney essentially had a clear field to present his arguments in a much more positive way. >> it wasn't contentious. it was positive. >> than had been done before. they'd been ripping romney so much in their negative ads that for a lot of people, it was the first time romney on his own terms got to describe his policies. >> let me tell you what i was thinking. i think driving in, i got 35 minutes. i was thinking in the first

debate -- and sometimes i do think maybe the tifirst debates can be more important p i think what helped the momentum switch a little bit to romney was that suddenly people who hadn't considered him a viable candidate all of a sudden thought, you know what? i'm going to give this some thought. maybe he is a viable candidate at this point. last night, i don't know if anything changed with that perception, and the people that love president obama and his big supporters, they were very happy to see him bring his a game and to be the barack obama they wanted to see. but he's already got their votes. >> fired up the base potentially. >> i don't know if anyone says wow, i'm changing my mind, he's not a viable candidate anymore. i don't know if the momentum shifts back. i was watching and there was a huge move in the first debate. last night, not much happening. 62 is not awful. >> i basically think you're right in that i think that there

was more upside for romney in the first debate than there was for obama in the second one. when you're the challenger, people don't know whether they can see you on an equal footing with the president. so he was able to take a big jump by doing that, as you just said. i think obama gains from the debate but i don't think he gains as much as obama did. stopped some of the romney momentum. and he is ahead. >> will we be -- this was unbelievable yesterday leading up to this. i don't know if it's going to be like that for the third debate. >> i'm not sure. >> is it going to be momentous too? >> i bet you the viewership is down 20% to 30%. >> could be. it's going to be interesting the see whether they both decide we were a little hot and dial it back. i'm not sure they will. because as long as this thing -- >> i wish they would. >> as long as this thing remains a neck and neck race, and especially if you're romney, for example, and you say well, my

momentum got braked by that last debate, this is my last shot and i'm still biehind by a couple points. >> the president can say i've got to keep pouring it on. >> did we get new details on the tax plan? i hadn't heard the 25,000 number. >> 17,000 before. >> romney -- that is a total evasion from romney in the sense that the idea is a decent idea, but he's putting all these numbers out so nobody can pin him down on any number. these are all notional. the notion is a good notion. to have a bucket of deductions and limit them. but he's not -- he hasn't been pinned down to specification. he's not going to be pinned down on specifics. >> i saw someone try to score that last night. you raise $730 billion over ten years, but again, you're taking -- >> by limiting it to 25,000 for everybody. >> taking five trillion off. so now you're down four trillion.

>> we had glen hubbard on after the debate and i said look, was there anything new of consequence that either candidate laid out tonight? and he looked at me and said you think the end of the campaign is the time to lay out something new of substance? >> they never brought up the fiscal cliff, ever. >> i don't think the words fiscal cliff were spoken. and i think that reflects the fact that for both candidates, the solution to that problem involves bad stuff that's unpopular. and that's why we're not going to hear about it and we're not going to get a solution. i still think we will after the electioning but we're not going to get one before. >> john harwood working overtime. appreciate it. when we come back, google's larry paige makes his first public appearance following an illness. we'll have his comments. plus, larry summers, why he warns that the at tdebate is paralyzing the economy. check out this video. the idaho potato commission is celebrating 75 years by sending a giant potato sculpture across

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making headlines, google's

larry paige made his first public appearance after an illness, speaking at a conference in arizona. that's where i've been the past two days. you probably haven't missed me that much. this is larry page talking about innovation. take a listen. >> got to have innovation, hardware and software at the same time needs to be well coordinated. i think our users are well served from us taking a leading role in that. but also being practical about it. there's lots of people who are good at making the hardware. we don't have to make all that hardware. we can cooperate with those people. >> as you can see there, his voice still suffering a little bit. page also talked about the euni trust probe and made a mention of google's maps being pulled from apple's operating system and he said he hopes to -- he didn't say specifically that they'd develop an app for the iphone, but he said he hopes to have it on all platforms. >> so it was apple that pushed it off. >> oh, it was absolutely apple.

it had nothing to do with google. they had yearlong contract to continue and apple pulled early. >> where was this, arizona? >> scottsdale, arizona. >> where do you fat cats stay? are you allowed to tell which place? >> it was where this conference was taking place. i think it was the montalucia. >> it was amazing, right? >> it was a nice place. >> did you have a chance to do -- like sit at the pool? >> no. because frankly, i was watching you guys yesterday. i'm working the telephones. >> why have it in arizona if you have no free time? you might as well have it in atlantic city or something. not that there's anything wrong with that. you know what i mean. why go all the way out to arizona. >> for the folks in california, like the google guys -- >> what's the headline, the lead from the thing? >> the lead? let me think about it. >> when we come back, we'll be speaking with former treasury secretary larry summers. stick around.

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you don't have anything. >> just explained what was happening with larry summers. that was pretty good. >> good morning. and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. one lousy margarita, that was your fun? >> it's work, work, work. >> show us the fruits of your lay bom

labor. >> he was on phone with us. >> you're not going next year. >> talked about great robots. >> here's my point. here is my point. to both of you doubting andrews and beckys. we are up 16% now in the s&p after the great beginning of the week when we weren't supposed to have a good week. i don't know whether it's qe-3 or the european worries actually dissipating a little bit. but we've got time. >> some decent earnings numbers coming through, too. >> we started at 1257. we're now 1454. the magic number is 1634. >> that's the kernen magic number. >> and black rock would obviously benefit. >> larry fink having a nice morning. >> yeah. 365 versus 331.

we've been looking at some of these numbers that are better than expected. you could certainly put black rock in that camp. >> and it's weird because in the old days we would talk about merrill lynch. >> black rock is the new merle rin -- merrill lynch. they talk about the potentially new treasury secretary. >> with larry, i've decided he definitely i think has something waiting for him. because to still say loyal when every other wall street guy is saying forget it, i'm not hanging on. for larry to stubbornly -- >> you're talking about larry fink, not larry summers. >> is larry summers -- >> he's going to join us via satellite. in fact, our news maker this

morning, larry summers. he is the charles w. elliot university professor at harvard. mr. secretary, thank you for joining us this morning. >> good to be with you, becky. >> pretty good swing. maybe spends a little too much time playing golf. i don't know. what's your handicap now? you're pretty good. >> not like you. not like you. i'm working teaching my students. you're off with all your business pals. i'm just working with my students. >> no one wants to cop to a low handicap anymore. you can't. >> i've got very little danger of that. >> larry, you've been writing an awful lot -- the press has been picki ining up what you've been saying about the fiscal cliff and what it means for the global economy. how big of a problem is this? >> we could take a situation, which is an economy that's starting to turn, that's got the prospects of a real recovery,

and blow it if we g over that fiscal cliff. if we let everything rip, it would be an act of huge irresponsibility that would make a return to recession very likely. it would be a huge mistake. we need to be moving forward. that means making sure that we're driving the economy in the short run so that it grows, because that's what's most important for the country and ultimately for our financial position. and that we put in place a credible plan, that puts the country on a fiscal track where revenues and expenditures are in some kind of balance. that's why i frankly found some of what i heard in the debate from the president's opponent so troubling last night. >> neither of them brought up the fiscal cliff ever, which is a little stunning. >> they didn't bring up the immediate legislative question, and that is obviously a hugely

important question for whoever is elected. but the president certainly did bring up the $8 trillion question, which is how is governor romney going to cut taxes by 20% on all taxpayers like he promised, spend $2 trillion more on defense, and carry through on the higher income tax cuts that president bush talked about. where is that $8 trillion going to come from without blowing up the deficit or hammering the middle class? it's all very well to say you have a principle, which is you won't raise taxes on the middle class, but if you've got $8 trillion to fund, there's no other way. and in fact, you saw something last night that i think was interesting and that people should pick up on. which is governor romney shiftded the debate to talking about the upper 5% of taxpayers. that's all taxpayers with incomes above about $100,000.

that includes a teacher married to a policeman. and that's the group that may end up having to pay more. and even the group below that, if you're going to fund all of $8 trillion. that is not the way to push this economy forward. the way to push this economy forward is by building the prosperity from the ground up, by working to support the middle class, whether it's making sure that peel don't have to stop spending with fear that they're going to lose their health insurance, whether it's making sure that all workers, women -- all workers get paid in a fair way, whether it's making sure that we're having adequate investment in rebuilding the country, at a time when the interest rate has been lower than it's been in two generation. at a time when construction unemployment approaches 15%.

can that be the moment to be slashing infrastructure spending across the country? i don't think so. the president's been trying to reverse that. >> you just brought up a point that i hadn't realized, that that 5% that he was talking about, the upper 5%, i didn't realize that included everybody who was making $100,000 and up. maybe that's the answer on how he ends up paying for all of these things. taxes he promised would not go down for anybody in that upper 5%. maybe that means he's eventually looking at raising for taxes for anybody above that. >> he also mentioned $200,000 -- there was a number where he said -- >> there were a bunch of numbers. >> anyone making less than $200,000, he was going to lower their taxes, right? >> well, that's what he said, but he also emphasized what was happening for the top 5%, and if you read the studies that have come out from his campaign advisers, they were only able to make the arithmetic start to work by talking about people with incomes over $100,000.

so look, i think that what governor romney needs to do -- and frankly what i think reporters like you need to be asking is how does this add up? the president has to put forward a budget. that budget is reviewed by the congressional budget office. it's reviewed by the joint tax committee. the numbers are all there. you can discuss it. you can debate it. governor romney -- no one has audited that. the people who tried, it really doesn't work. >> do you now think that all the bush tax cuts, except at the high end, were good then? i mean, if we never reverse any of the bush tax cuts on people below $250,000, it sounds like all of a sudden you've adopted that, that it must have been good policy since we can never raise taxes again on anyone under $250,000. >> this isn't the time to be raising taxes on people with

incomes below $250,000 with the degree of vulnerability that is still in our economy. we can make substantial fiscal progress by addressing the long run challenges of containing health care costs, by making an appropriate bipartisan set of adjustments to social security, by going after both those with incomes above $250,000, and frankly, substantial corporate tax abuse. you look at the foreign companies that show up with the -- the u.s. companies that show up with the highest profits abroad. and you look where those profits are. they're not in the big countries like china and germany and japan. they're in the big tax havens like luxembourg and ireland. that's not how it should be. >> job growth as weak as it is -- i understand what you're

saying for under $250,000. i still think you can make the case it's not a great time with job growth as weak as it is to raise it on people above 250. i know we always hear it's only 2% of the small businesses. but then we hear that 2% of the small businesses employ 2/3 of the workers of small businesses. so they're the most successful of the small businesses and the biggest job creators. it seems like if it's not a good time to raise on below 250, it's a weak enough economy that you start with maybe on the spending side and don't do anything on the tax side at this point. >> here's the problem, joe. we've got to put in place a plan that gets our spending and revenues in some kind of balance. if we can find enough wasteful spending, we'd all prefer to do that. i don't think we're going to be able to do that without slashing spending in ways that are very

dangerous. the kind of thing that's in the sequester, in what will happen if nothing is done about the fiscal cliff that would do real damage to our national defense. and look, let's have some perspective here. small business has, over the decades, done pretty well. when ronald reagan was president, for his first six years, we had the reagan recovery that governor romney talked about. top tax rates then were 50%. look at the period when the economy flourished best, including small business. when president clinton was in office. at the end of that time, when i was treasury secretary, we were paying down the national debt and we had a tax rate of 39% and it wasn't crushing small business. so it's a matter of finding common sense adjustments and there's nothing punitive about going back to a tax rate that's

lower than any top -- that's as low as any top tax rate we had in the second half of the 20th century. >> below 250 they were fine, too. you're raising three times as much money at that point. the people that you don't want -- >> you're going back to something that worked. and by the way, remember, when you hire people, it's deductible. so if you hire somebody and you've got a higher tax rate, yeah, your profits are going to be taxed at a higher rate, but your costs are going to be deducted at a lower rate so. the change in the incentive to hire people is very different than what a lot of the rhetoric suggests, and you can see that just by looking at what happened during the clinton years. >> larry, real quick, do you have any hope that no matter who wins this election that there's going to be any sense of consensus come 2013 on any of

these issues? >> i think it's possible. i've been watching washington for a long time, and one of the things you learn is that sometimes when the need is sufficiently great, the transition from inconceivable to inevitable can actually be fairly quick. i think it's pretty pervasive -- i think there's pretty pervasive disgust with our tax system. i think there's a prospect that if the president is elected with a clear mandate, that the congress will come together on doing a set of things. i've been gratified by the degree of support that's come from the business community for the fact that we need to break the gridlock and take some kind of substantial action. i think that will be one of the

things that will drive progress. >> the last three or four times we've spoken with you on the show, we never get enough time to ask you some of the other issues that are out there, including the social network and some of those questions. so if you'll ever do us the favor, will you come here for an hour or two so we can get to some of those things? there's so much to talk about. >> they're kicking butt. >> i never get the chance to ask you about these things. i need more time with it. >> it would be my privilege to come sit with you. i'll probably avoid some of you questions then just like i'll avoid some of you questions now, friends. but i would very much like to do that and talk about a whole range of issues. >> please let us know when that fits into your schedule, because we're going to yuz thuse that a

tease. >> two hours. it's like two hours on a train. takes nothing to get down here. >> when it works for your schedule, thank you very much, we appreciate your time today. >> look forward to it. >> play some golf, too. some of my business buddies. still to come, earnings and the economy, quarterly results from bank of america at the top of the hour. plus key data on the housing market. check out the dollar this morning.

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coming up on "your money, your vote," wisconsin republican

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president obama and governor romney squaring off in round two of the debates. joining us, ron johnson, member of the appropriations and budget committee. and senator, good to see you. and i'm glad you can do numbers, right?

>> yeah. i'm an accountant. >> we just heard secretary summers talking about an $8 billion problem. and he characterized it with -- >> $8 trillion, right? >> yeah. is it $8 trillion? >> $8 trillion. >> i heard 7.5 plus two, but -- >> yeah. >> we add another $1 trillion. >> you've got the $5 trillion we keep hearing with the tax cut. >> which has been debunked. >> and now you need to potentially go not below 250,000, but also between 100,000 and 250,000. i'm not convinced we can solve all our problems without, you know, without maybe looking across the board things to do with taxes instead of just above $250,000. but those numbers, they sound scary when put that way. is this voodoo economics like

the democrats are saying. >> first of all, any of these proposals will have to go through congress. governor romney lays out the principles. and i think what you do have to take a look at when you're looking at who you're going to elect for president, who can work for the other side. and governor romney has a history of that. in massachusetts working with a legislator there was 87% controlled. his plan are his last two budgets which have been voted on three times in congress, 0 to 610. people need to look at that. that's not just political talking point. you're talking about the president of the united states spending millions of dollars and thousands of hours preparing these budgets that are so unserious when we're facing the financial problems we're facing, there's not a member of his own party willing to vote for it. the problem is, his only solution is increasing taxes on the productive sector. the proposals they put forward. for example, the buffett rule would raise $5 billion, that

pays for 11 hours worth of spending. the more aggressive one the democrats put forward would raise about $67 billion to cover a $1.1 trillion -- you're taking a risk at harming economic growth, and that's what you need to concentrate on. you've got to grow your economy. >> it is weird, when i mention, they figure you've got to start somewhere. and i go, but you understand how they always say, no, you can't possibly raise taxes on $250,000 and below because it would hurt the economy. but they seem very comfortable that $250,000 and above. >> the investment decisions to make those capital expenditures. >> you heard during the clinton years and reagan years small businesses did just fine with the marginal rates higher. >> it was lowering the tax rates, the marginal tax rates, which was the incentivizing part of the tax code. under reagan, he got them down to 20%. my business was one of them.

>> when did you -- >> plastics. >> precisely, medical device packaging and printing applications. so it was those businesses that were started in the '80s. and by the way, these things don't happen overnight. >> you couldn't do that now? >> it'd be more difficult. be more difficult. what we're facing rather than 28% top marginal tax rate, we're facing 45%. now you're over 50%. how incentivizing is that for someone you put their capital at risk to have 50% of every profit dollar taken away from you. and that's taken of your ability to put money back into the business and that's just a fact. but here's another fact. under reagan, when he cut taxes, we went from $600 billion in revenue to $1 trillion, that's a 67% increase. even the bush tax cuts, 42% tax increase. >> thank you. and you're a private sector guy. and we appreciate it -- >> i know numbers. >> you do. we'll be right back.

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it was an all out political showdown in hempstead. the president and the challenger pulling no punches. >> i had a question and the question was how much did you cut them by? >> do you want me to answer them? >> we're adding up the score and rising above to put america first. >> the math doesn't add up. >> of course they add up. >> on the money for earnings. bank of america and pepsi both set to report this hour. we'll get the numbers and the latest developments. and the shake-up at citigroup, the second hour of "squawk box" starts right now.

good morning, everybody. welcome back to "squawk box" here on cnbc, i'm becky quick along with joe kernan and andrew ross-sorkin. right now, the futures is a bit of a mixed picture, at least it has been through the morning. the dow futures and the nasdaq futures have been pressured by the ibm and intel results that we got yesterday after the bell. intel, it was the outlook that was concerned, right now the dow futures down by about 17 points, nasdaq down by 6 1/2 points, s&p futures up by about 1 1/2 points. yesterday, the markets did continue with these gains, dow was up by 127 points yesterday. and we are looking through some of these numbers right now. >> bank of america, break even. >> break even. >> that's versus an expectation for a loss of 7 cents a share. the stock just at first blush is

right where it closed, 946 was the close, actually now bidding 937 asking 943. there was net income even though it was break even. there's $340 million of net income. things like consumer and business banking revenue was $7 billion for bank of america. the revenue number of 20.43 billion appears to be below the $21.8 billion that was on first call. but a lot of times things can -- with banks, things can actually affect revenue, not just net income. so if that is an apples to apples comparison, that would be below. provisions for credit losses at the quarter, end of the quarter was $1.77 billion which is flat with where it was a year ago exactly. it was the same number a year ago. a non-performing loans, leases,

and foreclosed properties at the end of the third quarter did drop a little to 24.56 billion, it was 25.38 billion at the end of the year ago period. now the stock's actually trading up a little bit, bidding 9.47 and asking -- i'm trying to see if there's other net chargeoffs a the the quarter end was $4.12 billion versus $3.63 billion at the end of the second quarter. so that's a sequential number they're talking about there. trading revenue, excludeing dva, sales and trading revenue, if you exclude, it was $2.5 billion. equity sales and trading revenue excludeing dva was $712 million. then we'll talk to an analyst at some point. shares are basically up a little bit, up about a nickel on the bid right now. >> let's talk real quickly about pepsi too also out with earnings. pepsi coming in with earnings of

$1.20. $1.20 is an adjusted number versus the 116 the street had been looking for. the revenue looks a little light. the company's also giving guidance and the outlook for 2012. they say they are consistent with what they've talked about with the previous guidance. they are expecting a decline in earnings per share this year of about 5% from what they saw of 440 last year, looks like 4.18. that looks a little above what the street at right now at 4.06. but talk about how the foreign exchange market has been an issue for them. that did pressure their earnings as we've seen from a lot of these international companies who make a lot of their sales. >> coke. >> same story yesterday. they are also talking about the chairman and ceo saying that because they had very disciplined pricing and sustained investment in brand building they saw 5% organic net revenue growth that came, 1% of that came from organic volume growth. 4% came from effective net

pricing. we're going to be talking to the cfo in about 25 minutes to get more on that. but again, pepsi coming in with numbers better than expected. >> we don't really -- pepsi's not as big in china as coke. >> they do have quite a large presence in china. i think what they saw in terms of volume, they break it out on the asia, middle east, and pacific, you know, same thing as pepsi where it was hard -- >> coke, and we had to see in the press release that china was weaker. >> we'll get a chance to ask hugh johnston about that later this morning too. also, about pricing, where they're able to make price increases stick. pepsi came in at 1.20 versus 1.16. >> people were writing in yesterday saying coke has no snack business. it's a higher margin business when you're just in soda, supposedly. to me the salty snacks and soda

overcomes the margin. some argue they have the right business model. >> they do say there were some issues in china and mexico because of refranchising that the net revenue there declined 17% but they say because of beverage refranchising. the second of three presidential debates, nothing like the first. president obama and mitt romney going toe-to-toe over jobs, energy, and taxes, which at times turned into angry cross talk. >> in the last four years, you cut permits and licenses on federal land and federal waters in half. >> not true, governor romney. >> by how much did you cut them by, then? >> we have actually produced more oil. >> no, you didn't. >> yes, you did. >> i should have said, oh, really, yes, you did, infinity plus one is what i always come

back with. they've got no response to infinity plus one. >> it happens with us a lot, doesn't it? >> it does. >> that usually gets them. but watching that, i don't know, there's a -- what is it when something gets too big and it's -- the returns start becoming hard to -- >> diminishing returns. >> was there diminishing returns last night with all of the arguing back and forth with facts? >> yes. >> i think the law of diminishing returns. it started setting in with me. >> the barrier that the president breached that thrills democrats and he didn't do in the first debate. >> showed up. >> well, not just showing up. but essentially saying to romney, you're not telling the truth. because what happened in the first debate was romney is running on a set of policies and positions and what he did was he didn't change any of them the first debate. that was wrong when the president said well, you were running on this tax cut now you're not -- no, he still is. but he described it in different ways and associated himself with the values that many swing

voters, suburban voters, women who are targets of his campaign share. and what the president did that was different last night was basically saying what he just did was put a package on stuff that isn't what it looks like. and so by calling out romney, that gave democrats something to rally around and gave him some prospect in an election where he's on the wrong side of the change issue where he could puncture a little bit of romney's -- >> when i hear -- like when the response last time was he cheated and he lied. when i hear that, i don't want to use that because i think it sounds small. and i think that's all you've got. when you say he cheated and he lied. well, if he was lying, then the other guy should've pointed out he lied. but i will say, just listening to -- there is -- i don't want to say b.s., so i won't say b.s., but i don't think of president obama as the oil and

gas president. i don't think the oil and gas industry thinks of him as the oil and gas president. >> they do not. >> they do not. and so hearing it again and again and, you know, that to me, i would have said maybe -- see i don't want to say he was lying, but i don't think that's necessarily factual. and then the other one was we all know that for probably two weeks it was characterized, benghazi was characterized as a spontaneous protest that turned ugly because of a movie. so he may have used the word an act of terror the next day, but we all full well know we didn't have the story for a while. so parsing that, you know, it's just the spin. >> honestly, joe, i don't see where that issue goes for. >> i don't know if it goes anywhere either. and secretary clinton took responsibility. >> well, and obama took responsibility and said she works for me. >> you know what i mean about that. it may not be an issue, but that was spun.

>> opportunistic and political, i don't even understand the point that republicans, romney are trying to make with that. what's the point? >> the point is that if you wanted it to look like things had returned to normalcy very quickly in libya, you wouldn't want a big security contingent. >> so what end? >> well, on a ten-year anniversary, you would hope -- >> trying to create the illusion -- >> we haven't lost an ambassador in 30 years. >> good foreign policy means no bad stuff happens in that part of the world. utterly conditioned on more than any other foreign policy issue that bad stuff happens to america. whatever your foreign policy is to reagan, to bush, to clinton. >> if you're holding -- you killed osama bin laden, holding yourself as a drone guy and tough of an all of these things. on the anniversary of 9/11 and you don't have your diplomats protected in these volatile places, and it's clear that it was a volatile place.

>> well -- >> that's why it's an issue. that's why it's an issue. >> well, but the issue they're trying to make -- >> we hear about it on monday night. >> i guess, but again, does anybody think obama doesn't want to protect his ambassadors? >> no one thinks the president doesn't want to create jobs and help the middle class, but we know that hasn't been the case. >> we know that he failed. that's a lock. >> right. and they're going to point that out too. >> did you hear larry summers, talking about taxes and the impact on business. and he made this point that actually if you're going to keep taxes for the top 5%, and i hadn't actually focused on that, i don't think anyone of us had, that you are effectively raising taxes on everybody over $100,000. there was a time during the debate where romney said something to the effect of i'm going to lower taxes on everybody under $200,000. did you catch that? >> i think the numbers are a little different. i've gone back and tried to look it up. some of the documents, i think

it's closer to 186,000 for the top 5%. >> i don't remember where the top 5% thing is. but these things get thrown out as metaphors and symbols and it's not actually tax policy. romney would cut taxes for everybody under $200,000 because he'd get rid of cap gains and dividends for those people. we'll see how his tax plan would divvy out once you do the rate cuts. and the president wants to raise taxes on more than just millionaires. i'll tell you the one thing i'm curious about, becky, is, did you catch the exchange about pay equity when he said, well, when i was -- the president talked about lily ledbetter, and he said when i was governor my staff recommended all men and i have binders with the resumes and there's a lot of viral stuff about binders full of women. >> yeah. i was trying to figure out what that was. i heard that reference last night and saw the stuff on

twitter. >> he said they came back with resumes. and the question is, was it responsive to the question, was it condescending? i don't know, but i know there's a lot of buzz out there. >> as a woman, i didn't find it to be condescending. to me, we went out and tried to find people. and turns out if you want women in these jobs, you need to be more flexible. >> he said he became the number one state of number one governor with women. >> obama touts fair pay for women despite records of women are paid less in his white house. >> and the other thing -- the woman who asked it. the question was women making 72% of the pay. >> exactly. >> that's been a number out there for decades at this point. that hasn't budged and hasn't gone up and it's a big problem. love to hear any solutions to it. john, thank you. we'll see you again in an hour. up next, we'll turn our focus to the markets and earnings. hugh johnston will join us to

talk about the just released quarterly results. and then at the bottom of the hour, the ceo of csx, the railroad's always a good economic indicator. . plus, we have reaction to bank of america earnings and changes at citi from banking analyst jeffrey harte.

welcome back to "squawk box"

this wednesday morning. let's get you caught up on the headlines. a dutch maker of chip making gear is buying u.s.-based cymer, a supplier of light beam technology that's a key part of manufacturing next generation computer chips. the national retail federation says the average u.s. consumer is going to be spending about $750 on holiday season gifts and other items. that's up about 1.2% from a year ago. and would be the smallest increase in four years. and ford is recalling 262,000 fiesta subcompacts for model years 2011 and 2013, 2011 to 2013, the recall is going to be fixing a possible issue with the programming for passenger side air bags. take a look at futures this morning as we get ahead of the trading day here. taken a look over here. monitor looks like it is slow there. i don't know what we got. there we go. dow looks like it's going to be off about 16 points, nasdaq off

about seven and the s&p 500 up slightly a little over two. >> i'm looking at the census numbers, and for the most recent numbers, the 2012 census numbers which reflect 2009, 20% of households made over $100,000. we can break down and look at a little more numbers on this. but it's not 5% that makes over, it's 20%, based on this number. >> interesting. >> all right. as we mentioned, pepsico releasing the quarter reports. joining us is hugh johnston. great to see you this morning. >> good morning, becky. >> thank you for joining us. we did see that pepsi came out with better than expected numbers in terms of earnings. you came in with earnings of $1.20 a share, street was looking for $1.16. looked like the revenue was a little light, but the outlook looks like a pretty good outlook. why was the revenue off a little? >> yeah, absolutely. as you said the earnings were a solid beat. four cents better than expectations. from a revenue standpoint, we

just refranchised our pepsi business in china. the analysts are catching up a little bit on the bottling on that. but the organic revenue growth was actually 5%, which was very solid, i think that'll put us on the top tier for consumer products for the quarter. and developing and emerging markets were 11%, which was really strong. we felt terrific about. >> of that organic revenue growth, 4% of it, of it have 4 percentage points of the 5% came from price increases, which is kind of surprising to hear that you could push through pricing increases at a time when we talk about the global economic malaise that's out there. i know it's something you have to do to keep up with commodity prices that have continued to come higher. but where do you get the price increases? and how do you keep it sticking with consumers? >> well, and you're right. it's commodities that have driven it this year. on a longer term basis, we'd expect to see more balance on our organic revenue. probably half volume and half pricing. part of the reason we're able to take that type of pricing is the

investments we've made in brand building over the past year. we've increased media spending 25% and our brands are strong and as a result in this environment they are able to sustain more pricing. that's not something we expect to do over the long haul. >> hey, hugh, with coke it was volume that had been growing at 6% in china, however they measure it. and it had slowed to a growth of 2%, which is what people were troubled with yesterday. you just gave a -- what i think -- pricing that's not an apples to apples. did volume growth in china slow from earlier this year? >> yeah. with the refranchising we've done, joe, they're the biggest beverage company in china. and the combination makes a strong beverage company. that's going to have the number one cola in china, the number one tea, the number one water, and soon to be the number one juice. in terms of performance, we saw

3% volume growth in july, 3% in august, and a strong 9% volume growth in september. so contrast to what we heard yesterday, our china picture is actually improving, and we feel very good about what's going on in china. >> and you're selling as much cola as coke in china? it's the number one cola? >> we are the number one cola in china. that's right. >> really? >> so the volume increases that you saw, it was part of this partnership that you have and it got the pepsi brand out in front of more consumers, is that what you attribute it to? that 9% is a really good number. >> yeah. that's exactly it. the partnership between us is going to be a successful one for the hong haul. that company is now by a factor of about 1.5, the biggest beverage company in china, and we expect this partnership to continue to grow, both volumes and over time grow profitability at an accelerated rate. so we feel like we've positioned

ourselves very well in what's the most important of all of the emerging markets. >> hugh, i see right behind you, one of the logos for gatorade, and that's a business that's seen all sorts of issues. shut down part of the business, at least not shut down the business, but you're going to bring some of that back, how does that look this quarter? >> well, gatorade was a bit soft this quarter. we clearly had a few challenges there. but i would expect to see gatorade to come back to growth starting in q-4, and i think we're going to be back on the growth trend for a good bit of time. part of what we're trying to do with gatorade is focus that business exactly on the athlete and exactly on the athletic occasion. we've also expanded the business from pure sports hydration into sports nutrition, with energy chews before athletic activity. >> some of that, you took off the market and were going to do a refresh on that, right? >> that's exactly right. so we're continuing to build that business out as being the leading sports nutrition brand

in all of sports. >> okay. >> wow. hugh, if we look around at some of the other international markets, where are the biggest take aways? is china your biggest success story at this point? >> china's a big success, india did very well. we grew volumes 12% in india in the quarter. so certainly feel very good about. that and russia where we've made significant investments in juice and dairy, russia's performance has been absolutely terrific. we feel great about the russia business, as well. as i said, developing and emerging markets across the world really performing strongly. that's leading the way in terms of our revenue growth. >> hugh, thank you very much for joining us today and we appreciate the explanation. >> okay. thanks, becky. >> thank you. coming up, we're going to get reaction to the surprise departure of vikram pandit from citi. details on how it happened. what the company will look like under his leadership. and more reaction from last night's debate. sparks flying at hofstra.

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questions about anything you see here, you can also follow us on twitter. coming up next, the railroads, considered a great economic indicator. well, the ceo of csx is going to be here to talk about what he sees on the rails and the state of a global economy. then, we're going to be getting reaction to bank of america earnings and what's next for citigroup and its new ceo. analyst jeffrey harte joins us when "squawk" returns. between le numbers... ...and listening to your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.

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welcome back to "squawk box," everyone. in our headlines this morning, mortgage applications fell 4.2% last week. that's according to new figures from the mortgage bankers association. but the demand for new home purchase loans did rise to the highest level in about four months. also, larry page made news in a speech on tuesday just by the fact he spoke. page hasn't spoken in public for months because of an ailment that affected his voice. he did address the conference in arizona. and his voice was there, which is good news. also, one economic stat on our agenda today. the government out with september housing starts in about an hour. economists are looking for an increase to annual rate of

768,000 units. and joe, i'll send it over to you. >> thanks. did you get any details on what the voice ailment was? you have no idea? >> no, nobody -- >> nobody knows? >> nobody knows, nobody talks about it. >> well, they can't. >> you can hear it in his voice, and we showed a clip of it earlier. >> it's not contagious? >> it's not contagious. >> you know you use your voice for your livelihood. >> my whole livelihood is based on this. >> that's what i'm talking about. so were you close? were you near? i was looking out for you. >> you going to put me in quarantine? >> well, i'm worried. >> i would be worried about you. >> that too. because the last time he came back -- what happened when he came back from africa. >> we all got sick. >> i didn't. you did. >> you got tapeworm. >> i didn't get tapeworm. >> it was disgusting. is michael ward -- probably listening. csx beat expectations with third

quarter results, but lower coal shipments fell 16% in the quarter. did you watch the debate last night? the issue of coal and the nation's energy policy was a huge topic. >> i was just at a coal facility where some 1,200 people lost their jobs. the right course for america is to have a true all of the above policy. i don't think anyone really believes that you're a person who is going to be pushing for oil and gas and coal. >> when you were governor of massachusetts, you stood in front of a coal plant and pointed at it and said this plant kills. >> we'll talk to a ceo whose business relies heavily on coal. michael ward, president, chairman, and ceo of csx. great to see you, michael, as always. >> good morning, joe. >> we think cars and we think grains, and we think a lot of different industries that matter to the railroads. is coal the biggest -- one of

the biggest, michael, truly? >> it is one of our biggest markets, joe, it's about 25% of our movements. and it's very important to us. and i think it's very important to the country as you alluded to in your comments that we utilize coal, it's a very reliable, cost-effective way to produce electricity and help our economy. and we think -- we support governor romney's pitch that we should be using more coal. >> people in west virginia and kentucky and the coal states are well aware of how difficult the business has gotten in the past -- not just the last 3 1/2 years, not just the obama administration. it's been tough for coal ever since, you know, it has something to do with climate change, i guess. and just, you know, pollution in general. but has it gotten tougher in your view under the obama administration than even prior to that, michael? >> i think it's been a particularly tough this year, joe. there was -- i call it the triple whammy. we had a very mild winter as you

recall, natural gas prices were very low by historical measures, and the epa's new regulations continue to put pressure on coal. actually our utility coal was down about 30% this year. that's a very significant reduction, which clearly impacts our -- the coal companies in west virginia, kentucky, and pennsylvania that we serve. >> we all want clean air and water, obviously. what epa regulations are you talking about? and from what you just said, i think i could point to actual job losses tied to the regulations from the epa, or jobs not being added. is that too big of a stretch? >> no, i think there's a number of the regulations, some of the old coal-fired plants could not afford to put the new control devices on them because of the age of the facilities. and we knew that by 2015, a number of those facilities would have to close down. i think that's been accelerated by the low natural gas prices we're seeing. but if we look at the rest of

the business, you know, as you saw, we were down about 1% in car loads this quarter. if you eliminate the impact of the utility coal, overall our markets were up about 4%. it's moderating some on the same basis in the second quarter we were up 6%. so we are seeing the economy moderate somewhat. and quite frankly, we're pretty pleased with the fact we're able to beat consensus. our team's doing a great job of controlling the things that are under the control. our productivity is going to be about $180 million this year. our safety's at near record levels and most importantly our service is at near record levels. w we're doing a great job for or customers. >> so you figure it feels to u you -- and you would know as a transportation component, it feels like a 1.5% gdp, 2%? what does it feel like?

>> yeah, i would say in that range, although, we're doing better than that. we grew about 4%. we're seeing very good growth in the market, and great growth in the automotive market, as well. >> auto is helping in this case. that brings us back to politics and -- >> yeah, auto is up about 17% this past quarter, joe. >> wow. >> current estimates are for 15.1 million light vehicle production compared to 13.9 million last year. >> is that an indication that the american car companies are doing better than expected? what does that tell us? or that the consumer's doing better than expected? >> i think it's a couple of things. both the traditional big three as well as the new domestic manufacturers. you recall last year there was the unfortunate tsunami that did impact some of the japanese-related production. but what we're seeing is there's actually pent up demand during the recession a number of people, we weren't buying cars at a replacement rate. so there's pent up demand. the u.s. auto fleet is the

oldest it's ever been, about 10 1/2 years. we're catching up from some of that lack of demand during the recession. >> so as china slows and as europe continues, it's getting better, but as it struggles, are you like -- is there six degrees of separation from what happens to you and what happens over there? i mean, eventually, it makes its way into hurting your results a little bit. but you're really more domestic than anything else? >> we're primarily domestic. but it does impact us on steel making, europe and asia will be impacted by the slowing economies there. as well the imports coming from china. obviously is something we move a lot of in our intermodal market. >> okay. >> is -- i -- overall the policies of the federal reserve. are you for that? i just wonder, michael, in a business like yours. is qe-3, is that would you say keep going or stop?

>> i don't know that the qe-3 has the biggest impact. i think what it is. there needs to be a level of confidence in the economy both by the consumers and business. and at this time, i think there's so much uncertainty out there that people are basically holding back. >> yeah. >> i think we probably need a little more certainty as to where our regulations and our government's heading before people are feeling confident to spend money. >> you've got a fiscal cliff and we've got an election. and then we've got, i don't know, liabilities, promises of $50 trillion or something. but other than that, everything's pretty good. everything's fine. but obviously we all worry about all these things. but nothing like the rails to give us a real snapshot into how things are. we appreciate it, michael. >> thank you, joe. >> and you were able to beat the quarter and grow 4%. thanks, see ya. >> thank you. coming up next, citi without vikram pandit, jeff harte's going to talk about the future under new leadership.

plus bank of america earnings. jeff harte will give us reaction to those numbers and what they say about the state of financials coming up next. up. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again. oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan,

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welcome back, everybody. take a look at the futures. dow futures down by about 18 points, s&p futures are positive, part of this is because what we heard last night from intel and ibm. ibm with results a little weak and that affects the dow and the nasdaq. it's a tech-focused one. also intel gave an outlook that concerns some people and both of those stocks have having an impact on the dow and nasdaq. a day after citi's management shake-up. joining us now is jeffrey harte. and jeff, we've got to get to a couple of things. let's talk bank of america first, but then we've got to talk about the drama in the board room over at citi. you look at these numbers. it's flat across the board. is that a good thing, a bad thing? >> i mean, the results themselves are actually a good thing. in an unusual kind of event, first call left all the items in this quarter. so the 7-cent loss consensus

number was kind of consistent with the gaap number. if you back out a couple of pennies of securities gains, i'm getting a couple cent loss, so the loss was better than we were expecting it to be. you back out the items, they were profitable. but i think the results were pretty good. what will cause people to pause a bit again is the mortgage reps and warranties. the requests they have, increased by what looks like 12% sequentially. not as big as the 40% sequential increase we saw last quarter, but that's, i think, going to kind of be back in people's faces again. and secondarily, on the trading side, the revenue was light. the first of the big banks we seem to have what looks like a sequential core decline in trading revenues. as far as the bottom line impact, though, really strong mortgage banking really upset the trading softness. >> if you look pre-market, looks like the stock up 2.5% if it opens up right now. what's your target on the company?

>> we've got an $11 price target on the company. >> not much here to move? >> well, the thing for b of a to move a lot from here is we've got to start seeing some of that earnings power we think is inherent in the franchise to start kicking in. and at least in the near term, we kind of have trouble seeing that ramp up with how much they've shrunk the balance sheet and how slow some of the costs are going to come out. one of those things, owning b of a three years out will be a home run, but over the next six to 12 months, yeah, we're getting close enough to the price target. >> if you were to compare the performance of brian moynihan with that of vikram pandit, you would say what? >> well, i think they were dealt different hands, it's tough to do a direct comparison, but they were both in a tough situation, i think they both have made the best out of the tough situation. vikram's probably had less, you know, publicized problems of drawing lines in the sand than something he can't control.

they've both have issues along -- >> the reason i ask, has brian done a better job than vikram. meaning, is it possible in the next 12 or 24 months we could see brian leave? >> it's always possible. i don't get the feeling that brian moynihan's kind of in the process of going anywhere. whereas for vikram pandit, there were some grumblings out there. so i think maybe what we're seeing here is maybe both of these guys have gotten the fundamentals to perform better, what the boards want to see and shareholders obviously want to see is the stocks performing better. >> right. >> and that's one of the things citi stock has not done and b of a has add big run year-to-date. if it doesn't keep performing well, you'll probably start hearing more talk about brian moynihan regardless of how well he's doing on the fundamental side. >> jeff, how comfortable were you yesterday with how this news of vikram pandit's ouster was

announced or completed by the board? seemed to have happen obviously literally seemed to happen overnight and happened overnight. does it make you anxious, nervous, are you happy about it? how do you feel? >> no, it definitely makes me nervous. any time you get a management departure quickly kind of suddenly like that, it implies there's some underlying problem. now, last night on the conference call, you know, both the chairman and the new ceo said up and down in a very regfd forum, there's no issues, nothing coming on settlement front implying libor. i think if that's the case, it's not concerning. i think it's a little disappointing because i think vikram had the company moving in the right direction. but he's good. i don't think he's going to change the direction of the firm, but he does bring some things and i think vikram pandit lacked a bit in. for instance, kind of his

presentation charisma. he'll do better job of articulating the story to investors, regulators, clients. and also, you know, he's a little more expense focused today as opposed to investing for tomorrow. not that they won't invest for tomorrow. i will think we'll see improved near term results. net net, this will be something that shareholders will like in the not too distant future. >> does it matter when the company knew this? because the timing and how this played out is still such a bizarre set of circumstances. if they knew on monday when they were having this conference call with analysts, does that raise any questions in your view about disclosure or what should have been told at that point? >> if they had already made the decision, it would kind of raise the flag. the thought -- the fact they were in the process of at least thinking about this stuff isn't a surprise. i mean, i was answering countless press questions in late august about secession plans. something's been on the back burner here for a while. >> okay. >> it would appear and i'm just

guessing here, something happened over that time period that pushed vikram to say hey, i'm leaving. i don't think the concept of him leaving was a surprise, but i don't think he'd be leaving within a day or two of reporting earnings or they probably would've handled that differently. >> jeff, we thank you for your perspective and coming on the program this morning. >> thanks, guys. always fun. >> and a quick note. it seems there's a he said/she said situation. he said, i went to o'neil and wanted to leave and he's saying, we had this all planned and we were trying to kick him out. >> oldest story in the book. first thing we said yesterday, you know, when he says -- when the board said we have accepted the decision to leave. >> if he said -- >> we accepted his decision he'll do what we tell him. >> he says we're thinking of firing you and you say, okay, i resign. i think that's where we are in

terms of what happened. >> right. >> okay. when we come back, the tense exchanges at last night's presidential debate. more on it. but "squawk box" will help you rise above the rhetoric. chuck gabriel will talk to us about what investors need to take away from last night's town hall debate. stick around.

the yankees are making some adjustments to the lineup last night before a pivotal game three in detroit. those adjustments, though, didn't pay off. the tigers had the answer with one of the most dominant pitchers in the game. justin verlander who reportedly is dating kate upton. only allowing three hits on the night. raul ibanez had a chance for another magical moment, unfortunately struck out to lose the game. the one interesting thing in "the post," that gossip rag is that a-rod -- >> that we read first thing in the morning. >> a-rod the other night spotted some babes in the stands and passed a ball to one of them

saying give me your phone number. so i think he got taken out of the lineup later anyway for the next day, but he did get the phone number for the hot aussie bikini model. so you can do that -- that's your kind of story. >> it is my kind of story. >> it's right here. page three. >> okay. >> yeah. >> and there they are. >> he didn't strike out when it came to -- >> he's hitting a home run. >> right here. >> yeah. there's all the -- over here, andrew. >> that way. either way. going a different way every time. there's a-rod's ball girl. >> page three. >> page three. >> you've got to love the guy, though. he's slumping a little bit, but not in a slump there. let's take a look at stocks to watch. it's amazing. so many things at once, right? >> playing baseball. >> it's amazing. cymer is being bought by

asml, the world's biggest supplier of computer equipment to chip makers. blackhawk, $3.47 a share, 15 cents above expectations, citing new strength in business and increase in fee income among other things. stanley, black and decker reported third quarter profit of $1.40 a share, 5 cents below expectations because of difficulties in european markets which weighed on the results, although it's upbeat about the u.s. and asia. 39 cents a share, a penny ahead of expectations, company provides internet security and says a north american market delivered great results. intel, 58 cents a share, 9 cents above expectations. revenue exceeded consensus, which had been coming down, the ceo says the current environment continues to be tough and intel's profits are being hurt by declining pc sales. ibm reported $3.62, which

was a penny ahead of estimates, but revenue was light by about $1 billion. ibm also sees full-year earnings of at least $15.10 a share compared to the current street estimate of $15.15, that's close what the stock has indicated to come down today after what we saw late yesterday. >> we didn't look at pepsi chart. we did talk to the cfo earlier. we mentioned that pepsi beat in terms of the earnings per share. it was a little light on revenue, but i did want to see where that stock's trading right now. i think the indications are a little mixed, $69.95. higher in the premarket. the indication and the bid ask straddles it. closed yesterday at $70.30. after what he said about china i thought was very interesting not realizing they had done the new partnerships. they have a new bottling partnership there which is the largest soft drink distributor in china, which is going to give

them, they said, they saw slowing volume growth. 3% in july, 3% in august, but took off in september, up 9%. and that's different from what we heard from coca-cola yesterday. talked about how they'd seen their volume growth in china of 6% year-to-date but it was 2% in the most recent quarter. >> if you own intuitive surgical, you strap yourself in because you've had a great run, but you're going to lose a little today. intuitive surgical saw better than expected revenue for its latest quarter. but lower than expected growth in a number of procedures performed with the company's equipment has that stock down 4%. and apollo is also indicated down substantially. >> that's a strap yourself in stock. >> apollo is. any given day. coming up next in the next hour of "squawk box," energy policy a topic of contention in the p the chresidential campaig.

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or romney victory would mean for your portfolio. stock picks from political forecaster chuck gabriel of capital alpha partners. and the energy factor in the election. >> how much did you cut licenses and permits on federal land and federal waters? >> here's what we did. >> we'll clarify both candidates' positions on production of oil and gas in the united states. >> and breaking economic data. housing starts for september due at 8:30 a.m. eastern, the third hour of "squawk box" starts right now. ♪ so huge ccr fan. welcome back to "squawk box" here on cnbc. first in business worldwide.

i'm joe kernan along with becky quick and andrew ross sorkin. and we have a big lineup this hour. john harwood going to join us with a post debate wrap-up. and look ahead to the final debate which is monday? >> boca raton. >> that'll be the final debate on monday. are you going down there? >> yeah, i'm going down there. >> you are? >> that's a good place. >> how could i miss it? >> every week, you're pulling all-nighters, you're like a college kid at this point. >> caffeine. >> more coffee. >> i thought you were raising like southern comfort or something. >> no. >> all right. we'll break down the election scenarios and what it means for your portfolio. political forecaster chuck gabriel's going to tell us what stocks are likely to move before and after november 6th and also depending on the outcome. we'll get housing data, housing starts at 8:30 a.m. eastern. economists looking for a 2.4% rise in the september number compared to a 2.3% rise in

august and we will kick off a special day of coverage on cnbc. the energy factor in the election. brian shactman will join us from a place we heard about last night, the bakken formation in north dakota. a massive boom since energy companies began fracking for oil and gas. did you see it? >> i did. romney. >> romney did. >> becky has your morning headline. >> bakken, i saw it in the prompter. >> i think it's baaken -- i don't know. is there a reason you want me to spell it? >> no, no, there was a very good kicker for the st. louis cardinals during the 1970s called jim bakken. >> i thought you were practicing your usual brand of gotcha

journalism. >> it's b-a-k-k-e-n. >> like the kicker. >> we heard from bank of america which broke even in the third quarter. revenue did fall a little short of consensus. that stock is up by a few cents in the pre-market activity. also, pepsi posting earnings of $1.20 a share. that was four cents better than the street was looking for. revenue came in a little shy on this one too. but hugh johnston joined us earlier this morning and here's what he had to say about the company's growth in china. >> in terms of performance over the last couple of months, we saw 3% volume growth in july, 3% in august, and a strong 9% volume growth in september. so contrast to what we heard yesterday, our china picture is actually improving and we feel good about what's going on. >> johnston was referring to coca-cola, which came out with earnings yesterday and talked about how their volume growth had actually slowed in china in the third quarter. year-to-date, it was 6%. but for their volume growth just for the third quarter, it was 2% in china. by the way, johnston said the

company's biggest recent success successes have come in china, india, and russia. after all the earnings we heard this morning, plus with what we heard last night from intel and ibm, they did have disappointments for the street after the bell. intel, it was the outlook that was the concern. those two stocks pressuring the dow and nasdaq futures. they're down slightly, the s&p futures are down slightly. dow was up better than 120 points yesterday because investors have been taking some things and seeing things they like and all the earnings reports that have been coming in. take a look at what happened in asia. overnight, the hang seng up by 1%, in japan, up 1.2%, and europe this morning, green arrows, as well, kelly evans was pointing out that they're getting toward the end of the euro crisis. you do see the ftse up by modest gains.

of. >> larry summers weighed in on the economic recovery. if you've got $8 trillion to fund, there's no other way. the way to push this country forward is to build the prosperity from the ground up, by working to support the middle class. >> summers said the tax rates under president clinton were not an impediment to jobs and economic growth. and we are joined by john harwood now, the presidential candidates. i got a little chippy at last night's debate. >> i was just at a coal facility where some 1,200 people lost their jobs. the right course for america is to have a true all of the above policy. i don't think anybody really believes you're a person who will be pushing for oil and gas and coal. you'll get your chance in a moment. i'm still speaking. >> all right, john, there were a few moments like that.

i asked larry, just for a second, i said, so, it almost sounds like, and i hear it a lot that a lot of democrats now really like most of the bush tax cuts and think that we shouldn't reverse them. the ones they don't like are for 250,000 and above. and secretary summers said, well, this is not the time to raise taxes on it, but a lot of times that's sort of a -- what's the word? not stretched, but tortured argument to make. it would hurt if we did it below, but those people above 250,000, they put in the bank anyway and don't spend it. i think that's the argument they make. but in such a jobless environment that we're kind of in right now, or at least a weak, tepid recovery, i think the case can be made that if you like those bush tax cuts, you might as well go for another year and then let's talk about big-time tax reform. >> well, and that is the box the president put himself in in late

2010 by signing an extension of the bush tax cuts on the grounds that the economy was too weak to raise taxes. now he's making a different argument. he has to make the argument while the economy's in stronger shape now, we can afford to raise taxes on some and now others. >> got a lot of flak. i think if he hadn't gotten so much flak from his base, he might be willing to avert the fiscal cliff by saying, all right, i'll give you another year, but we've got to come up with tax reform and entitlement reform by the end of that year. >> of course they've got -- they do need money. we do have very large deficits and you've got to figure out where to get it. >> we're arguing now's not the time and austerity, the other side argues that a lot. that we -- this is -- we've definitely got to get handle on this this in the future. tips on treasuries aren't indicating. even though the cpi yesterday. see that? >> that was a huge number. brought us to the highest cost of living. >> those are for people who

still eat and have cars. >> this is summers argument, as well, which is -- basically the whole administration, economic team has made the argument, yes, we need medium and long-term austerity relative to current policy, but we don't need it right now. and -- >> you don't hear that so often, though, from the obama administration. >> no -- >> you rarely hear them say we're going to get -- give me two years to do it this way and two years from now i'm switching course. >> nobody's talking about that. >> well, no, i disagree, the argument for long-term deficit reduction is if we started gradually and don't go too fast, it will be -- it will sort of solve the conundrum of helping the economy short-term and getting our house in order in the long run. mitt romney accepts that principle too, when he's talked about budget cuts, we can't do it all at once, it'll hurt the economy. >> bowles/simpson too, decisions

you want made now but put into effect a few years down the road. >> bowles made that point last week. >> and if you're going to ask people that receive things from the government that are most in need, if you're going to ask them to cut back, the people that are flush might as well get them to pony up as well. >> on your point about getting to comprehensive tax reform, i think that's something that everybody would like to do. the question is, is it politically achievable? >> i know. and it's been taken a long time in the past to get much smaller things that we're trying to do. >> 1986 was introduced in 1983 or something. >> and it wasn't nearly -- >> well, there was a long period of time when bipartisans were pushing this idea, but the interesting thing is, and it goes to the question about detail. and people hit both candidates, more so romney because he doesn't have a record in office.

remember, ronald reagan ran on a vague promise of tax reform in 1984. didn't have a plan. the plan came out much later. >> do independent voters who are let's say former obama voters disappointed obama voters? do they look at romney saying you know what? we're going to hold the line and actually the wealthiest are still going to pay the most. does that help his argument? >> yes. >> a lot? >> yes. >> that was one of the signal successes of romney in the first debate was making the case, which people had not heard. it'd been his policy all along. he said from the day he announced in february, he said the rich aren't going to pay any less, it's going to be distributionally neutral. that's why it was so effective for romney. and what the president has to try to do is puncture that and he's saying he's going to do that, but it's not true because it's impossible. and that's the crux of that tax debate. >> i think we've got to get -- i don't think you saw this yet,

the a-rod story. you can read that, but thank you, john. >> is a-rod done? >> he's not done. he's just -- he's just getting started. >> no, he's doing a lot of things out there. he may not be hitting. >> he scores. >> it was a mock tweet from a-rod to obama saying, dear mr. president, how do you get your mojo back? i'm just asking for a friend. >> nice. >> john, real quickly, he kicked seven field goals in a game. >> i believe he holds the record. >> he does hold the record. >> i remember him too. >> read that a-rod story. he's not keeping his eye on the ball. let's go now to kayla tausche with details from the bank of america media call that just took place. what you got? >> hey, andrew, good morning. first i want to touch on litigation, that was a key facet of the call for reporters. litigation in the quarter, the company took a $1.6 billion

charge, but investors were placated by the fact that some of the legacy issues are now starting to get behind the bank. and as far as future unreserved litigation expenses, the bank this quarter put a cap on those saying they would be capped at $6 billion. that's about $1 billion increase from last quarter. the difference is that estimate includes government entities which is a big deal here. b of a cfo thompson feel, for the time being we do not have a settlement or potential settlement with fannie mae. bank of america showing clear benefits of qe-3. the bank took a $400 million hit to net income. hedge became ineffective. but did make $3 billion on increases in value of the mbs portfolio, clearly $3 billion outweighs a $400 million cost and the mbs portfolio valued that trickled down, that's

another positive point for investors. a few other things i want to mention, the continued low rates will start to hit the bank. thompson saying because of the low interest rate environment, the bank was able to repurchase a lot of its debt, but over time, it will stop being able to do that and that footprint will start to fade. on the mortgage front, he says the bank is looking to take share on the retail mortgage front from the likes of wells fargo and jpmorgan. finally an update on head count from the last year, head count for non-legacy asset servicing is down by 8% or 21,000 heads, the bank is making progress. guys, back to you. >> thank you very much. again, kayla tausche. when we come back, google's larry page making his first public appearance after an illness. we'll bring you his comments after this. plus, we'll break down the election scenarios and tell you what stocks are likely to get a boost after november 6th. we'll also talking about what's moving after last night debate. chuck gabriel will join us next, a political forecaster.

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welcome back to "squawk box" this morning. making headlines. google's larry page made his first public appearance after an

illness that impacted his voice speaking at his company's annual conference in arizona where i was the past two days. take a listen to what larry page had to say talking about the innovation behind google's maps. >> i get really excited about things we can do at google to really seriously change the world. seven years ago we started to work on maps. you know, and you think about that, that was before phones, smartphones, couldn't really use the maps on your phone, had to use it on a computer. it'll be really nice to have a virtual representation of the real world that was accurate, and seven years later we're kind of almost there and we're excited that other people have started to notice that we've worked hard on that for seven years. >> you can still hear that his voice is trying to recover. page also talked about the eu anti-trust probe. president obama and governor romney clashing last night at the second of three debates. the markets obviously have been heading higher throughout the

election season. and are now near record levels. how should investors be playing the momentum swings that we see. joining us now is chuck gabriel, managing director of capital alpha partners, forecasting political issues for nearly 30 years. and who do you think won last night? or was there a winner? >> president obama probably one on points, becky, he certainly stabilized his campaign, but he did not reverse mitt romney's momentum. so we are absolutely heading into a horse race, and of course, one more debate next month. >> before the election last night, you were saying the most important thing to be listening for would be romney's response to the 47% issue. he didn't get a chance to respond to that because the president brought it up in the closing statement. so what do we take away from that? >> yeah, that was quite interesting that the president didn't bring that up. it's interesting and by the same token, mitt romney didn't bring up the president's gaffes about you didn't build that and some of the others. so i think that their

strategists and handlers on both sides had wisely counselled not to get petty. but the president was able to get off that shot at the end that was that romney couldn't counter. i would point out that one interesting thing is that even though a snap poll by cnn gave the president a narrow margin, 46%, 39% in terms of victory, on every issue that matters, on economy, on taxes, on jobs, even health care a majority of respondents felt that romney had won. in essence, i think what the president did, he beat expectations, which i didn't realize were this low and proved he can get in there and fight and he certainly energized his base. how this will play with independents is the key. >> at this point, you think it's too close to call? >> it's getting to the point where this looks just like either 2000 or 2004. and that's one of the first big investment implications of all of this. close elections can have really royaling implications.

i don't know about you, but after election day 2000, i was basically in a fetal position channel surfing for five weeks while they were counting and the supreme court broke it up. if you were to take that kind of result again, and we could have the same kind of final result in 2000. you could literally have a 50/50 senate which would put a huge premium, the control of the senate on how you would work out a presidential race, which could be thrown to the, you know, obviously the house of representatives if you get a 266, 269-269 tie. there are all kinds of scenarios, and if you super impose on top of that the fact that congress has punted on the fiscal cliff and we don't have basically a resolution on control of the government as we move into a really key period for resolving the fiscal cliff before all the bells and alarms go off on january 1, you know, it could roil shareholders. >> is that an argument for staying on the sidelines? or an argument for getting in

before there's resolution and it's too late to follow any sort of surge if there is a solution? >> well, it's interesting. those who have engaged in willing suspension of disbelief and climbing this wall of worry all fall and summer have been so far. we're stuck at the mid 14th century mark on the s&p, obviously. >> right. >> and at this point, kind of held up as we are, i don't know looking at this debate last night and heading into this final horse race why anybody would be committing additional capital at this point. but i'm an optimist by nature, so. >> i can give you 80 billion reasons a month why they would be putting money in the market. >> well, i am one of those, joe, that's in the camp that thinks regardless of who wins, we're likely to work our way through this. >> i'm talking about qe-3. you got money like that flowing into the market. you wouldn't -- you'd be out of the market or short the market? that money's going somewhere,

isn't it? >> i'd be on hold and, you know, i really kind of pity the investors who did fight the fed tape as you say. and the real significance, i guess, joe, we don't have a monetary cliff in parallel with this fiscal cliff. bernanke removed that. >> we can't see it. it's out there. you know, we're in a dense fog and have no idea when we're going to drive off the end of it, i think, right? >> some day. yeah. >> yep. >> i remember writing a piece called "saving president obama" kind of the same theme of "saving private ryan" and look at the unlikely cast of characters that have, you know, positioned him to win reelection and certainly ben bernanke is high on that list. the supreme court justice roberts is in that camp. it's an interesting cast of characters. >> yep. >> if romney wins and bernanke loses his job, how does the market take that? >> yeah, i doubt that's going to happen. i think bernanke will be allowed to stay in place in spite of the really tough rhetoric that mitt romney has subscribed to.

so i think that -- yeah, i think glen hubbard is a strong enough horse whisperer to mitt romney that he'll know that with the markets now addicted to the additional, you know, qe-3 stimulus that doing anything that would seem to jeopardize that would be very hurtful for the markets and you don't want to start a new administration that way. so i don't think that will happen, personally. >> all right. chuck, i want to thank you for much for your time on this. obviously chuck thinks this is a close call, but also thinks if romney wins, companies like manage care companies, offshore drilling companies, banks, credit card companies would do well. if obama is reelected, hospitals, medicaid hmos, rail safety equipment, rear view cameras, they would all do well. >> red stocks and blue stocks. >> chuck, are you willing to play romney in the mini series if we are -- if we have one? >> well, you know, joe, when i

contributed to him and i thought as i stood in line, what am i going to say to the governor when i got up there? >> you were separated at birth. >> well, thank you for that. but, you know, i thought maybe i should whisper just for men or something like that, but i ended up talking about a mutual friend -- >> he doesn't have gray in the side burns yet. >> yeah. both handsome money. thank you, chuck. coming up, we'll get thelating houthe la latest housing start data. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab...

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and the government's latest read on home construction. we are a few minutes away from housing starts numbers. that compares with a 2.3% rise back in august. "squawk" will be right back. [ male announcer ] you are a business pro. governor of getting it done. you know how to dance... with a deadline.

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welcome back. we are literally just seconds away from all this data for housing starts. rick santelli is standing by at the cme. rick. >> here we go. september housing starts, surprise to the upside. 872,000 annually adjusted rate. if you look at permits, 894,000, both of these numbers are higher than expected. both have subtle but not meaningful revisions to last month. so we'll call this number up, i don't know about 14.5%, 15% on the top, call the permits up little less than 12%. when was the last time we had 872,000 on starts? well, i will peruse the information. it's taken me way back. looks like about july of '08. july of '08 since we've had

these numbers. so that is a good thing. whether housing's bottoming or not, it certainly seems as though we've had a spat of data that makes one scratch their head. and on housing in particular, it seems to be doing the best in that category. you know, yesterday's nahb wasn't really higher than expected, but it's still solid and still higher than it was several months ago. i really think that the driving factor today, interest rates, should we close up here at 1.77, this would be close to a one-month high yield. the same is true in europe. moody's with a negative outlook on spain. probably following the new story about the potential line of credit and the potential bailout and the potential for germany not to vote for either. but it seems as though europe is definitely not in the news in the same way it was. stabilization seems to be taking hold. we'll just leave it at that. back to you.

>> thank you, rick, for the number. steve's going to give us more on those housing numbers in a minute. but first, we have breaking news from nike this morning. nike severing ties this morning with lance armstrong. in a statement just released, they wrote, due to the seemingly insurmountable evidence that lance armstrong participated in doping and misled nike for more than a decade, it is with great sadness we have terminated our contract with him. nike does not condone the use of illegal performance-enhancing drugs in any manner. they go on to say that nike plans to continue support of the live strong initiative created to unite, inspire, and empower people affected by cancer, but it's worth noting this morning that lance armstrong stepping down as chairman of live strong, apparently -- >> he's going to stay on the board. a 15-member board. the vice chairman at this point the founding chairman is going to take over. the chairman responsibilities, but the concern was that all of this negative publicity that's happening right now would affect the live strong organization. >> of course, nike had been

supporting lance armstrong up until today and there were lots of questions about what had happened. some people even speculated that they had helped lance armstrong throughout all this as an enabler. >> as i heard throughout the last couple of weeks, a couple of sponsors -- there's no way. and in fact, anheuser-busch -- >> you're thinking of micholob ultra. >> the gentlemen who wrote the book, three or four years now that was on "60 minutes," and wherever i'd see those commercials, i was like, are you kidding me? you're still running these? and i guarantee -- i would bet my life you do not see another commercial with lance armstrong in them. are they that insane in terms of branding? >> from what i understand inside these contracts, there are provisions around steroid use and what that means. so it's not only possible that he is ultimately being severed,

but whether there could be lawsuits later from the sponsors to him. >> well, they bought damaged goods. what they built their brand around is now damaged goods, and you brought up the -- >> well, "the times of london," settled with him over libel. >> four or five years ago. >> because they had reports on steroid use, he sued them, they spent millions of dollars first trying to defend it then looked like they were about to lose, then they settled with him. now there's talk they're going to use this report to say, look -- >> we were right. >> we were right the first time around. >> we had lance on, it'll be seven or eight years ago. charlie asked him about doping, lance armstrong almost walked out of the shot. charlie later saw him in a bar and they physically, he picked a fight with him for asking him about it on the air. which was, this is all sort of -- >> all coming home. >> exactly. let's get to liesman, which you --

>> you've got views on the numbers or lance? >> i've been really interested in this lance armstrong story because -- >> you're a doper? >> i was duped about the doping. i thought it was untrue. it looked like it was all specious to me when it initially came out. >> i remember you defending him at times. >> gradually it got to be like, all right, there's too many people. like the employment report. who need to be lying for there to be -- >> you're so good with what you do with the economic numbers and all the polls, i can't believe you're doing it all naturally. are you -- >> oh, you mean -- >> as good as you are. >> juicing. action economics. yeah, no, no, no, i'm juicing on a regular basis in order to get the -- oh, nice. well, thank you for that, joe. i want to talk quickly. this is a good number. it's not as excited as armstrong and nike. but this is a good number, and it goes along with a trend that we've seen. some of these things in the economy that are related to the consumer have been getting better. we had sentiment up, retail

sales up, and -- >> auto sales and we had michael ward the ceo of csx who said they were up 17%. the auto shipments -- >> did he talk at all about the business side of his business? in other words, business shipping to business. that kind of stuff. that's the thing going weird and squirrely right now. >> as he sees it, probably in a 1.5% to 2% gdp economy. >> what's happening with the recent data is it's a little bit more like that 2% plus economy, 2.5%, they've ratcheted up about 1/2 point on the expectations. am i making this exciting enough, andrew? >> very. >> they've ratcheted up a little bit the expectations for gdp based on what's happening with the consumer side. on the business side, morgan stanley out last night with the business conditions index. something i follow kind of with my left eye, with my right eye closed. the reason is -- >> you're moving your eyes in different directions. >> how is business in the industries that you cover? >> right. >> it plunged by 18 points from

a surge in september, down again, hiring down, all of this they believe coming from concerns about the fiscal cliff. which raises the great question, is the consumer naive or is the consumer smart? when you talk to guys, what's going to happen with the fiscal cliff. 30% chance it may go over, 70% chance we don't. maybe the consumer is wise to this idea it's not going to hit the economy in the way that businesses -- >> although, i did see a study from the national retail federation that said something like 61% of consumers say the fiscal cliff and the threat of it will impact how much they're going to spend over the holiday season. which was a little stunning. >> it's a consumer-related thing. >> a consumer-related. but at the same time, it was a little weird because the question right before that was how many people know what the fiscal cliff is? 55% said they knew what it was, 61% said it was going to affect what they were spending on because that second question laid out what the fiscal cliff was. >> i could see the fiscal cliff being a factor in there, but i

don't think it's the decisive factor relative to how much money's in their pocket. >> they did say it would have an impact on how much they would spend. >> and what's nice about it, not nice, what's interesting about it, look at the decline leading into the recession. now, it was early, but '06, it starts to go down. so it looked like a pretty decent leading indicator they were going to pop back up as soon as the technical end of the recession right there. and now it's been kind of bumping along and that little plunge we have recently. one other thing, how is it possible we've done three debates and not a mention about the number one economic issue? i guess number two. >> housing. >> housing. >> we were pointing out earlier, last night, and nobody mentioned the fiscal cliff either. you don't want to talk about the tricky things. >> why is that? >> john harwood said it's because you don't want to talk about these things that are too hard to fix that you don't have answers for. >> i think that's true for both of them. >> neither of them have an answer. >> obama has a series of policies. >> for housing. >> obama has a series of --

>> they'll extend it a year -- the fiscal cliff is not an issue. >> obama has a series of policies he had in place, none of which have worked exceptionally well, although recently looks like tit's doinga little better. i had to ask him about the debate we sponsored or put on, i think it's a hands off. the government does not have a role here. so i guess once they say that, there's nothing to say. i'm kind of amazed it doesn't come up organically from the audience, how do you feel about housing? >> because the moderator gets to pick the questions too. >> when we do our all america survey, nothing is more determtive about it than housing. it's probably the biggest asset. it strikes me that doing something about this would have been -- would be something that would be of concern and significance. >> republicans want to deal with fannie and freddie, they don't

want to do mortgage forgiveness stuff. >> you don't hear fannie and freddie. >> so it's not for prime time is the thought. that doesn't mean we can't talk about it and make it an important issue. >> good point. >> mr. liesman -- >> thank you very much. >> you have a very big head. >> what? >> he has one of those big -- >> he's got a big brain, that's what. >> a lot going on. >> it's all -- >> you've got a juicer head. >> growth hormone. >> is that what -- >> no, no. >> steve -- i've known steve for over a decade. >> he's not juicing? >> no, he's just got a big brain. >> thank you, becky. >> we'll talk about it some other time. >> you do all this naturally, it's amazing. >> it's organic. coming up next, the energy factor in the election all day, cnbc is rising e ining above th sound bites. brian shactman's going to bring us details from williston, north dakota. brian? >> reporter: well, the

unemployment rate in williston is .7%. you can get $17 an hour to work at the local walmart, the united states postal service needs workers, all of this because the oil boom that's happened under the obama administration. so why is it the democratic candidate from congress distancing herself from obama when it comes to energy? we'll make sense of it all next on "squawk box." estor. i invest in what i know. i turned 65 last week. i'm getting married. planning a life. there are risks, sure. but, there's no reward without it. i want to be prepared for the long haul. i see a world bursting with opportunities. india, china, brazil, ishares, small-caps, large-caps, ishares. industrials. low cost. every dollar counts. ishares. income. dividends. bonds. i like bonds. ishares. commodities. diversification. choices. my own ideas. ishares. i want to use the same stuff the big guys use. ishares. 8 out of 10 large, professional investors choose ishares for their etfs. introducing the ishares core,

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♪ into a high-tech masterpiece? whatever your business challenge, dell has the technology and services to help you solve it. welcome back to "squawk box." energy policy has been a topic

of contention in the presidential campaign. and throughout the day, cnbc will be bringing you an in-depth look at energy issues and try to rise above all the partisan bickering and campaign talking points. cnbc's brian shactman will kick things off with a look at the oil boom that has resulted from fracking the bakken shale in a state where not many people have been, i don't think. i don't think i've been -- have you ever been there before, bri? >> reporter: i've been here now three or four times since i got on this story two years ago. >> on this beat, yeah. >> reporter: so i know it very well. where i'm standing now is a bunch of houses and construction behind me. it was a pile of dirt two years ago. now, i wasn't around for the wild west, but i will tell you, still has that feel here. there's construction everywhere across the landscape. there's a lot of money, a lot of testosterone, but the one difference maybe between now and 200 years ago, the people here know what's going on in the rest of the country.

and of course, this election might not be a referendum on energy policy, but there is a lot of concern here the bakken has flourished under the obama administration. something he often points out on the stump and touched on last night. >> the most important thing we can do is to make sure we control our own energy. so here's what i've done since i've been president. we have increased oil production to the highest levels in 16 years. >> obama has accepted the way of this fracking freight train here which brings in literally hundreds of millions of investment dollars each and every month. but last night mitt romney actually referenced the bakken and reiterated he thinks the gains here are in spite of president obama. >> the president's right in terms of the additional oil production. but none of it came on federal land. as a matter of fact, oil production is down 14% this year

on federal land. and gas production is down 9%. >> listen, the fear here is basic. for whatever reason, they think that things might change over the next four years when all the building, all the development, and the drilling is at its absolute peak. i talked to williston's mayor. even though growth remains incredible, it actually has eased up a little bit partially due to politics. >> i think there's a certain amount of just saying we're just nervous, let's wait and see what happens in this election before we get too carried away. >> we have to put it in perspective. i had a five-hour drive and i saw everything. i saw construction, everything from churches, to banks and of course oil rigs. so the boom is very much intact, but every -- everyone is talking politics, even in the coffee shops here in williston, north

dakota. >> brian, what have they kind of take away. if last night was a draw, if it's hard to say what happens, what were they saying at the coffee shops and things? >> well, here's what it is. and it's funny because obama's been president for four years, but they feel like they don't know what will happen whereas with romney they feel confident that he will preserve what is intact. and this whole issue with fracking which has become a populist issue, they take fracking away and literally it's like the guy packs up, he packs up his suitcase and runs out of town. that's how quickly this would go away. and sos that a lot of the concern. >> hmm. brian, thank you. your statistics are amazing. i'm still kind of floored by the idea of $17 an hour starting pay, 0.7% unemployment. trying to get my head around all that. brian, thank you very much. >> reporter: i'm -- >> go ahead.

>> reporter: you're welcome. >> no, go ahead, finish your thought. sorry, there's a delay here. >> reporter: no, i mean, the numbers -- i just want to reiterate the numbers. the $17 an hour at walmart, but even that guy can't afford a room to rent because rent's $2,500 and we're at the top of a development that's going to have like 1,000 units. what if you had 1,000 units you invested $150 million on and that might go away if fracking would stop. people are excited but they are concerned. >> and the idea of sitting in traffic in williston, south dakota. thank you and we'll see you throughout the day. >> reporter: you're welcome. >> all i know about north dakota is fargo, real good, you betcha. >> you've seen it? >> yeah, a bunch of times. >> very good. big paul bunyan statue. coming up, the latest buzz on the resignation of vikram pandit. we'll talk banks with david faber. that's next. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused.

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we're back on squawk talking about banks. david faber, do you want to start with bofa? >> sure. we're going to be talking about it, of course, kayla tashy has been here speaking about it. andrew, kind of a mixed bag. they made progress in terms of capital, increase in their capital yapal ratios. performance of the businesses was okay. the dynamics on the putback issue, one hedge fund manager said to me, you're looking a bit better. we'll see how the stock trades this morning. andrew, i wonder, you see what happened to vickram yesterday. do you want a little worried?

>> i think you do. we talked about brian moynihan's prospects over the next 12 to 24 months. i thought the implication was he could be next on the block. but when you go back and look at the sort of board room drama and this he said she said, where do you come out? if vickram gets a call from o'neal and says, look, come to my office and talk to me and by the way, i may fire you and you actually go to the office and say i'm going to resign, can you say i wanted to go visit with him and i visited with him and i decided i'm not going to do it any more? >> you know, yeah, i use the word at one point i think firing yesterday. the journal today uses ousted. andrew, we know how these things go. in my opinion, and i know mr. pandit spoke to maria bartiromo and she reported on his comments. but in my opinion, this is not how it goes and given the way it went and what i believe and many other people believe, certainly a lot of his key executives who

i was able to speak to yesterday believe he wanted to stay at that bank. and so, come on, you know, what really happened? well, yeah, all right, we disagree with the way you're doing things. why do you disagree? well, we disagree because of this. you have to change this. forget it. was he fired or is he leaving? >> i think we're going to have to leave it at the he said she said. >> faber, i thought you said pushed out before anyone yesterday. >> i did. >> that's why i don't understand. i thought you said that first. >> i did. >> but you didn't really know, though, did you? or did you? >> well, i had a very good sense. >> okay. because i thought you said it first. i was here. all right. >> that funny has a good nose. >> of course you do. come on. >> wall street. yeah, i do. >> dennis thiebs originally.

>> wasn't it based on the movie? >> no. i think it was on wall street and then it was said in the movie. >> two minutes on "squawk on the street." >> thanks. when we come back, obviously, several thoughts on the move ahead of the opening bell. but there can be only one stock of the day. so is it in your portfolio? we're going to find out, right after this. bob...

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stock of the day because it's up 6 % is cymer, the dutch manufacturing equipmentmaker. asml is buying the company for $276 billion in cash and stock. i think, you know, probably ibm might be more significant, but that is a 30 point gainer on the

set. what the heck is that? >> my collar has been messed up for the last 22 hours and 30 minutes and i'm trying to fix it. >> it looks great. >> no. anyway, let get to this. among the other stories we're watching today, high drama on the san francisco bay, there was a racing catamaran that capsized while practicing. the accident involved the massive oracle team usa boat at-72. larry ellison has always been involved in this. that boat overturned and began breaking apart a couple hours later. now, no one was hurt. oracle says the boat cost between $8 million and $10 million to build. and yeah, there it is now. andrew, should we go back to the bunny? >> yes. bunny has a good nose. it was from den of thieves. he was talking to marty spiegel

and he said your bunny has a good nose to tell him to stop. however, spiegel had a friend named bunny laster who told him the same thing. >> gordon gekko was telling this story about a son to rudy said you know what happens when you stick your nose in the honey pot. >> we have to run. make sure you join us tomorrow. "squawk on the street" begins right now. >> good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber. melissa lee is off. jim cramer is on assignment as you may know already. got some cross currents going this morning. earnings, not really any good, but housing starts are monster. a four-year high. permits up, as well. meantime in europe, moody's chooses not to downgrade spain to junk